Commodity Prices Up 8% In Q1

January 3, 2011

The big deflation in prices for metals, plastics, lumber and other commodities seen in 2009 is long gone. Purchasing magazine’s index tracking transaction prices for 109 industrial commodities rose 8% in the first quarter this year. And the magazine is forecasting an overall 17% rise for ’10, followed by another 6% increase next year.

While 304 stainless-sheet prices moved up 7.4% for the first quarter, many other materials experienced more robust increases. Aluminum sheet jumped 11% while copper sheet rose 11.6%. Nickel, an important component of higher grade stainless-steel products, saw prices increase 11.7%.

The carbon steels also witnessed some aggressive price increases. Cold-rolled sheet prices were up 14.7% and those for electro-galvanized sheet jumped 16.8%.

Building materials and energy prices also rose during the period. Prices for Douglas fir 2’x4’s jumped a whopping 34.1%, while ½” four-ply CDX fir plywood prices rose 14.1%. Natural gas also rose 14.1% from some of the lowest levels in years. Extrusion-grade LDPE, on the other hand, was only a penny more expensive than first quarter versus the fourth quarter ’09 at 59 cents a pound.

With the rising price for nickel, Purchasing forecasts stainless sheet will move 10.6% higher in the second quarter to nearly $3,000 a ton with the nickel surcharge. It expects stainless prices to then hold steady the rest of the year. Still, a forecast second-quarter price of $2,994 a ton would be 43.5% higher than the second quarter ’09.

The reasons for the run-ups are simple: increasing demand, especially from booming Asian economies.